Pages

Friday, January 18, 2008

Are Real Wages Countercyclical, Procyclical, or Acyclical?

Eric Swanson of the San Francisco Fed provides an interesting, nuanced answer to this question using data from the Panel Study of Income Dynamics. From his abstract:Although real wages were procyclical across the entire distribution of workers from 1967 to 1991, the wages of lower-income, younger, and less-educated workers exhibited greater procyclicality. However, workers’ straight-time hourly pay rates have been acyclical, suggesting that more variable pay margins such as bonuses, overtime, late shift premia, and commissions have played a substantial if not primary role in generating procyclicality.